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India Exim Bank opened the year in style on January 4, 2021, successfully launching a USD 1 billion 10-year Bond. The coupon of 2.25% is a record low for any 10-year bond issuance out of India. The Bank, whose balance sheet is substantially dollarized, is one of the largest Indian issuers of long-term debt in the international debt capital markets and its paper is treated as quasi-sovereign. The funds thus raised will be used by the Bank to support Indian project exports, overseas investment by way of long-term credit and its export lines of credit portfolio.

The issue was launched early morning in Eastern markets (Hongkong and Singapore) and within three hours was over-subscribed twice. The Bank then tightened the initial price guidance of CT10+185 bps by 40 bps to end at CT10+145 bps, well inside the fair value point on the curve. At close, with US investors also coming in, the issue was oversubscribed by more than 3.5 times, with several high-quality investors having to settle for less than their requested allocations.

In terms of geographic distribution, the bonds were distributed 55% in Asia, 29% in USA and 16% from EMEA region. In terms of distribution, the bonds were distributed to high quality investors with around 68% distributed to fund managers, 17% to Sovereign Wealth Funds, Central Banks and Insurance companies, 14% to banks and 1% to private banks and others.

Barclays, Citigroup, HSBC, J.P. Morgan, MUFG and Standard Chartered acted as Joint Lead Managers and book runners for the offering. India Exim Bank has been rated as ‘Baa3 (Negative)’ by Moody’s, ‘BBB- (Stable) by S&P and ‘BBB- (Negative)’ by Fitch, same as the rating of Government of India.

Speaking on the occasion, Mr. David Rasquinha, Managing Director of India Exim Bank, said, “We are delighted to open the debt markets in 2021 with this signal achievement – a billion dollars for ten years at a record low coupon. With the upsurge in GST numbers, improvement in GDP, and the recent approval of vaccines, the confidence in the India story is surging once again. With a strong market opening trade from India Exim Bank, many other Indian issuers are likely to follow suit to access the foreign currency bond market.”

Ms. Harsha Bangari, Deputy Managing Director said that India Exim Bank has been continuously monitoring the market for a possible issuance window. This is the only 10-year transaction by an Indian Financial Institution in the last one year. The quasi sovereign nature of the Bank and EMBIG index eligibility of the bonds helped in the price tightening. The swift build to the book and the large book size, even after significant tightening by 40 bps demonstrates strong confidence of overseas investors in the India story and in India Exim Bank. Throughout the lockdown period, the Bank had been regularly engaging with overseas investors, a move that paid off well as investors bid aggressively.

India Exim Bank aims to promote India’s international trade and investment. The Bank offers Indian companies a comprehensive range of products and services, supported by analysis and research, with a view to enhancing their international competitiveness. The Bank aggressively supports Indian exporting companies, especially medium-sized enterprises, in their globalisation efforts through a variety of lending programmes.

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